We have previously established that membrane-type metalloproteinases (MT-MMPs) are essential for skeletal development in the mouse, where collagenolytic activity is critically dependent on MT1-MMP and MT3-MMP. Importantly, the traits associated with loss of MT1-MMP in the mouse are a remarkable phenocopy of the human disease, Winchester syndrome (OMIM # 259600), which now is identified as a homozygous mutation of the MT1-MMP locus. Due to the pleiotropic nature of MT-MMP null-mutations and the widespread expression pattern of MT-MMP in bone, bone-associated tissues and non-bone tissues, we have generated and utilized a conditional deletion mutation mouse strain. We subsequently deleted MT-MMP activity in a progressive cell-maturity and developmental stage-specific fashion in connective tissues to assign the cell- and tissue-specific functions of pericellular proteolysis mediated by MT-MMPs. Additionally we have addressed the role of MT-MMP activity in the monocyte/macrophage/osteoclast compartment where the significance of MT-MMP expression is poorly understood. To establish the role of MT-MMP activity in pericyte-like cells, the early un-committed mesenchymal progenitor, we have ablated MT1-MMP activity in SM22alpha positive cells. Loss of MT1-MMP in this subset of cells is reminiscent of universal MT1-MMP ablation including dwarfism, rampant bone resorption diminished bone formation, progressive wasting, fibrosis and early demise. These observations demonstrate that cells forming the skeleton are recruited out of the perivascular cell pool and utilize MT1-MMP to exert their function. A successive step towards osteogenic fate is expression of the transcription factor, Sp7/Osx. We utilized Osx-Cre expressing mice to ablate MT1-MMP in early committed osteoprogenitors. This leads to overt skeletal dysmorphism and secondarily, a rampant bone resorption reminiscent of unconditional MT1-MMP deficiency, yet less severe than that observed with SM22alpha-specific ablation. This observation is consistent with the ability of MT1-MMP to cleave and shed RANKL. Proteolysis thus works as an attenuation factor in osteoclast recruitment together with the RANKL decoy, osteoprotegerin (OPG). Next, the role of pericellular proteolysis in Osx positive progenitors was contrasted with the function of osteocalcin and collagen (Ocn, Col1) positive, mature osteoblasts. Unlike Osx-specific deletion, Ocn- and Col1- mediated ablation of MT1-MMP leads to grossly normal mice, which however display diminished bone mass in adulthood. Thus, while progenitor-specific deletion results in dysmorphism and resorption, osteoblast-specific ablation mainly affects bone apposition, but not resorption. The hematopoietic microenvironment is critical for proper bone formation and remodeling and we have demonstrated that cells devoid of MT1-MMP activity fail to support postnatal marrow formation in an ectopic bone/marrow ossicle model. We propose that MT-MMPs plays a pivotal role in the migration and recruitment of hematopoietic stem cells and their ability to populate potential hematopoietic environments postnatally. Accordingly, we have demonstrated that the bone marrow of MT1-MMP deficient mice retain twice as many hematopoietic stem cells (HSCs) as observed in wildtype littermates. In an effort to identify the HSC-retaining cell and the cell responsible for mobilization of HSCs into the circulation, we demonstrated that Osx-specific loss of MT1-MMP reduced mobilization of HSCs. In the context of skeletal homeostasis, one of the important descendants of HSCs are osteoclasts, which expresses abundant levels of MT1-MMP. We utilized LysM-Cre mice to specifically ablate MT1-MMP in osteoclasts, and unlike other cell specific-deletions, this leads to an increased bone content. This observation is consistent with diminished collagenolytic activity in osteoclasts and suggests that proteolytic removal of soft tissue (always present in a thin layer on bone surfaces) prior to mineralized matrix resorption is essential for osteoclast function. MT-MMP activity is required in remodeling of specific unmineralized cartilages in the skeleton. Until now, it has remained unresolved if this remodeling mechanism is a property of chondrocytes or connective tissue cells adjacent to the cartilage. Using cartilage specific ablation of MT1-MMP activity, we have established that chondrocytes are essential for the remodeling of the cartilages. Importantly, neighboring cells fail to remodel these unmineralized cartilages and chondrocytes are thus essential for this remodeling process. We furthermore demonstrate that the combined loss of MT1-MMP in cartilage and universal loss of MT3-MMP dramatically exacerbates the disruption of cartilage and induces a severe growth retardation and dwarfism, and extreme craniofacial dysmorphology.